Analysing the Data Centre Policies of India.

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Analysing the Data Centre Policies of India.

Yashasvi Rathore

@Yashasvi

August 8, 2025

Public Policy Cloud Computing IT Services

Analysing the Data Centre Policies of India.

As India's digital economy surges, a fierce competition among states is und

erway to become the nation’s data center capital. Propelled by widespread digital adoption and the rollout of 5G networks, data center capacity is projected to double from 0.9 GW in 2023 to approximately 2 GW by 2026. Yet, beneath this ambitious growth lies a significant challenge: a fragmented policy landscape where a single national vision is implemented as a "one nation, many laws" reality. This divergence is creating a complex investment environment, with states offering a kaleidoscope of incentives that can make or break a project's viability.National Policy Frameworks

The central government has established several policies to guide the data center sector:

Draft National Data Centre Policy (2020): This policy aims to make India a favorable destination for data centers by promoting the domestic manufacturing of IT and non-IT equipment, ensuring access to affordable and uninterrupted power, and enhancing network capabilities. It proposes granting "Infrastructure status" to the sector to facilitate access to credit, rationalizing clearances, and institutionalizing time-bound single-window clearance mechanisms. The policy also recommends declaring data centers as an "Essential Service" under the Essential Services Maintenance Act (ESMA) and creating a separate category for them in the National Building Code of India (NBC 2016).
Digital Personal Data Protection Act, 2023 (DPDP Act): While this act boosts demand for domestic data center infrastructure, it can also lead to fragmented data environments and increased operational costs if not accompanied by harmonized governance frameworks.
IT Act, 2000, and IT Rules, 2011: These provide a national legal framework for IT and cybersecurity, requiring entities handling "sensitive personal data" to maintain "reasonable security practices". However, the enforcement and interpretation of these rules can vary at the state level.
CERT-In Directions: The Indian Computer Emergency Response Team (CERT-In) issues mandatory, non-negotiable directives for cybersecurity incident reporting, creating a uniform operational standard for security across all states.
Bureau of Energy Efficiency (BEE): BEE sets national energy efficiency standards for commercial buildings, including data centers, which are often complemented by state-level incentives for green energy adoption. This results in a varied landscape where operators must meet national benchmarks while navigating state-specific benefits.

State-Specific Policies and Incentives

The actual implementation and operational environment for data centers are largely dictated by state-level policies, which vary significantly in their definitions, incentives, and regulatory approaches.

State	Policy Name	Key Features & Incentives
Maharashtra	IT/ITES Policy 2023	Offers a permanent 100% electricity duty exemption and "Essential Service" status for 24/7 operations. It provides a 100% stamp duty exemption for land purchases and relaxes building norms. A single-window clearance mechanism is available through the MAHITI portal.
Uttar Pradesh	Data Centre Policy 2021	Aims to attract investments worth INR 20,000 Crores to develop a 250MW data center industry. It provides a 25-50% tiered land subsidy, a 100% electricity duty exemption for 10 years, and commits to dual power grid supply for the first three data center parks. Data centers are declared an essential service.
Karnataka	Data Centre Policy 2022-2027	Incentivizes development outside Bengaluru with a 10% land subsidy and a 100% stamp duty exemption on land up to 10 acres. It promotes green energy by offering an industrial power tariff for facilities using at least 30% green energy. The Karnataka Udyog Mitra (KUM) acts as a single-window agency.
Tamil Nadu	Data Centre Policy 2021	Defines data center units with a minimum Eligible Fixed Assets (EFA) of Rs. 500 crores and explicitly excludes captive data centers from incentives. It offers a 100% electricity tax waiver for five years, concessional open access charges, and dual power from two different grids for facilities with a sanctioned load of 50 MW or more. The Guidance portal serves as a single-window system.
Telangana	IT/ITES Framework (2016)	Declares data center firms as an "essential service" and provides exemptions from inspections under various labor acts, allowing for self-certification. It offers subsidized land and power, including fuel for backup generators at lower than market rates.
Gujarat	IT/ITES Policy 2022-2027	Requires greenfield Tier 3 or above data centers with a minimum built-up area of 4,000 sq. ft. and at least 150 racks to be eligible for incentives. It offers a one-time CAPEX support of up to 25% of eligible expenditure (maximum of INR 150 crores) and a power tariff subsidy of INR 1 per unit for five years.
Haryana	State Data Centre Policy 2022	Features a 100% electricity duty exemption for 20 years, making it one of the most aggressive long-term power incentives. It offers single-window clearance with approvals promised within 10-15 working days and allows self-certification under 14 labor acts.
Odisha	State Data Centre Policy 2022	Provides a 20% capital investment subsidy and a 30% power bill subsidy for five years. It offers a 100% electricity duty exemption for 10 years and a 100% reimbursement of transmission/wheeling charges for captive renewable energy. The policy also focuses on local skill development and employment generation.
West Bengal	Data Centre Policy 2021	Leverages geographical advantages like the upcoming submarine cable landing station at Tajpur and existing electronics manufacturing clusters to attract investments. The policy aims to build an integrated digital ecosystem.

Impact on Investment and Operations

The fragmented policy landscape creates significant hurdles for data center operators. While most states offer single-window clearance, the reality is often a prolonged and unpredictable approval process that can require over "30+ approvals". Variations in definitions for what constitutes a "data center," different land use laws, building norms, and labor law relaxations mean that operators cannot use a standardized design or operational model across states. This forces companies to bear the burden of complexity, increasing costs and influencing where they choose to build their facilities.

For India to reach its full potential as a global data center destination, policy harmonization is crucial. The industry has called for a unified national policy, genuinely effective single-window clearance with strict timelines, and a standardized category for data centers within the National Building Code. Recommendations for achieving this include empowering a central nodal agency with enforcement powers, developing a model policy for states, and fully digitalizing all clearance processes.

India Data Centers policy analysis national policy frameworks state-specific policies incentives Digital Personal Data Protection Act CERT-IN Bureau of Energy Efficiency Maharashtra Uttar Pradesh Karnataka Tamil Nadu Telangana Gujarat haryana Odisha West Bengal Investment operational challenges policy harmonization digital economy 5g single-window clearance infrastructure status

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Yashasvi Rathore

Manager - Legal Services

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